Rising mortgage rates made it harder to buy a home in 12 of 13 Canadian cities in April
Ratehub.ca April 2026 Affordability Report
Key takeaways
- Affordability conditions worsened in 12 of 13 major housing markets in April.
- A combination of rising mortgage rates and home prices is placing added pressure on buyers.
- Markets remain volatile due to the war in Iran, which could cause mortgage rates to increase in the near future.
It appears Canada’s housing market has shed its winter doldrums – and home buyers are feeling a fresh financial squeeze.
The latest monthly Affordability Report from Ratehub.ca finds that, in April, affordability conditions worsened in 12 out 13 major Canadian housing markets; two cities more than when the analysis was run in March.
The study, which is based on national real estate data, changes to mortgage rates, and the corresponding mortgage stress test, defines ‘affordability’ as the amount of income a borrower would need to earn in order to qualify for a mortgage on the average-priced home in their city. When borrowing costs or market conditions cause that required income to rise, it whittles overall affordability factors for local home buyers.
Rising home prices and mortgage rates are impacting affordability across Canada
In April, both rising home prices and mortgage rates contributed to tougher buying conditions. Bond yields – which set the pricing floor for fixed mortgage rates – have steadily increased since March, as investors react to spiking oil prices due to the war in Iran, and the resulting pressure that’s putting on inflation. This has had an elevated effect on global yields, including the Government of Canada 5-year yield, which acts as the benchmark for Canadian five-year fixed mortgage terms.
As a result, the lowest five-year fixed insured mortgage rate in Canada rose from 3.79% in March to 4.04% in April. That also pushed the average five-year fixed rate utilized by the Affordability study to 4.47%, up from the previous 4.39%. The corresponding mortgage stress test rate, which tacks 2% onto the contract rate borrowers get from their lender, also rose to 6.47% from 6.39%.
In addition, home prices appear to be stabilizing nation-wide, with some markets experiencing steeper increases; the Canadian Real Estate Association reported that in April, the national average rose by 2.2% year over year to $695,412.
April 2026: How much did you need to earn to buy a home in Canada?
The housing market that saw affordability worsen by the largest degree was Ottawa, where the benchmark home price increased by $12,100 on a monthly basis, requiring the average local home buyer to earn $3,150 more to qualify for a mortgage on a home priced at benchmark of $629,800.
According to the Ottawa Real Estate Board (OREB) sales in Canada’s capital city have been showing signs of stabilization, after a chilly winter in terms of demand. Activity has picked up month over month, with 1,336 homes sold compared to 1,075 in March, and the market can be considered to be balanced overall.
That propelled Ottawa from ranking 9th last month in terms of eroded affordability, to the most impacted city price-wise in April.
For the second month in a row, Victoria ranked in second place, with the benchmark home price increasing $5,400 to $891,400. That’s pushed the required income up by $2,270 for local buyers. This has been driven by a robust uptick in sales so far this spring; the Victoria Real Estate Board (VREB) reports transactions rose by 11% on a monthly basis, with 642 properties sold. That increase well outpaces the national average monthly increase of 0.7%.
On the other end of the affordability spectrum lies Fredericton, the only market that saw an easing in the required income. The benchmark home price in the east coast city dipped by $15,500, to $342,200. As a result, a buyer there would need to earn $2,450 less. According to the New Brunswick Real Estate Board (NBR), sales have dropped by 4.4.% year over year for the Fredericton area.
Will mortgage rates go down in Canada?
At the moment, it’s not looking likely that mortgage rates will decrease in Canada in the foreseeable future. As the war in Iran continues – adding plenty of volatility to markets – bond yields will remain high, keeping fixed mortgage rates considerably elevated compared to where they were at the start of 2026; today’s fixed-rate shoppers are looking at rates in the upper 4 - 5% range, up from the upper 3’s just a few short months ago.
Variable mortgage rates have been stable in recent months, as the Bank of Canada has maintained a rate hold stance, and they’re also the most affordable option, with the lowest five-year variable term currently 3.35%. However, these conditions may not last. The same factors that are pushing bond yields higher, namely, spiking oil prices and inflation expectations, are also putting pressure on central banks. If inflation starts to significantly increase as a result of higher energy prices, affecting supply chains and associated goods – rather than just the gas pump – that could prompt the Bank of Canada to increase its benchmark rate, perhaps by as much as 50 basis points, before the end of the year.
While taking on a variable rate currently offers savings compared to fixed-rate options, borrowers should be aware their rate and payment size may change before their term is up, and either have the budgetary flexibility to absorb those higher payments, or a strategy to convert to a different rate type if needed.
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What is the prediction for Canadian home prices in 2026?
From a national perspective, home prices are expected to stay pretty flat in 2026, to edge up by just 0.9% to $295,094. This is according to the revised forecast released by CREA earlier this year, which states that a mix of ongoing economic uncertainty and rising borrowing costs continue to dissuade would-be home buyers.
CREA anticipates that that home sales will rise by 1% across the course of the year compared to 2025 totals, but that growth will be uneven, depending on the region; Ontario and British Columbia are expected to drive sales gains, while price growth will stay pretty minimal in the most expensive markets, such as Toronto and Vancouver.
However, there’s plenty on the horizon that may shake things up for home buyers. A resolution to the war in Iran would have the most significant impact on the interest rate trajectory, but whether that will occur – and when – remains extremely unclear. The renegotiation of the United States-Mexico-Canada Agreement (USMCA) this summer could also introduce new volatility, should our neighbours to the south introduce more tariffs, or scale back the exceptions on products protected under the current agreement.
The takeaway for home buyers and borrowers: Mortgage rates remain highly volatile, with plenty of headwinds that can shake up pricing. Taking out a pre-approval and rate hold is a wise move to secure today’s current rates – and protect your affordability – in the case prices move up again in the weeks to come.
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Penelope Graham, Head of Content
Penelope has over a decade of experience covering real estate, mortgage, and personal finance topics and her commentary on the housing market is featured on both national and local media outlets.